Lifesaver in the community

There’s been much talk in the press lately about a small federal healthcare program called 340B. It requires drug manufacturers that receive reimbursement from Medicaid and Medicare Part B to give a significant price break on outpatient medicines to certain safety net hospitals, health centers and clinics. These facilities use the money they save from these discounts to stretch their federal dollars, serve more patients and improve the quality of their care.

To hear some tell it (mainly from those with drug industry connections), 340B is rife with abuse. Many hospitals don’t need the extra help, they say, and they are ripping off patients, taxpayers and the drug industry. The program, they say, needs drastic reform.


That is not the 340B program that we know.

One of us is a former Michigan state police trooper and U.S. congressman representing Northern Michigan. The other is a Vietnam veteran, registered pharmacist and board trustee of a small rural nonprofit hospital in Michigan. When it comes to politics, we don’t always agree. But we totally agree that the savings hospitals and other safety net caregivers receive from participating in 340B yield real benefits for patients, local communities and, ultimately, the nation as a whole.

Take the example of Michigan’s Aspirus Ontonagon Hospital, a 25-bed facility near the Lake Superior shore. Not long ago, it nearly closed due to years of financial losses. That would have cost 150 jobs in a county with a labor force of only 3,000 and an unemployment rate near 20 percent. And more importantly, patients would have suffered terribly.

The hospital enrolled in 340B in the latter half of 2010, the first year it was eligible, and in early 2012, it contracted with the county’s only retail pharmacy to make drugs that the hospital bought at 340B-discounted prices more accessible to the hospital’s patients. By charging insured patients for these drugs at standard rates (exactly as Congress intended when it created 340B), Aspirus Ontonagon began to accrue savings.

In late 2012, the hospital used those savings to establish an oncology service staffed by a full-time oncology certified nurse and a part-time oncologist. This new service — which 340B savings made possible — means that more than two dozen local people no longer have to travel up to 150 miles away, or even out of state, for cancer treatment.

Aspirus Ontonagon Hospital is also using its 340B savings to ensure that cancer patients in the community are able to pay for their medications. Those who are insured get help understanding their coverage and those who aren’t find out if they qualify for free or reduced cost services. In one recent example, an uninsured patient saved more than $36,000 over the course of her cancer regimen thanks to help from the hospital.

That’s just one hospital’s 340B success story. In Minneapolis, Hennepin County Medical Center uses 340B savings to help patients manage their medicines better, which saves patients money, reduces hospital readmissions and prevents medication errors.

In Richmond, Va., Virginia Commonwealth University Health System uses 340B savings to coordinate healthcare for the uninsured through a network of medical homes.

In the Black Hills of South Dakota, Regional Health uses 340B savings to provide indigent patients with temporary supplies of prescription drugs when they leave the hospital or emergency room, to help address Native Americans’ healthcare issues, and to help those in crisis transition to the care they need without a delay in treatment because of a lack of insurance.

These types of successes are precisely what Congress hoped for when it created 340B more than 20 years ago and then expanded it later with both Republican and Democratic support.

Multiple reports show that safety net healthcare providers use 340B savings just as Congress intended. For example, the Government Accountability Office found in a September 2011 study that all 340B entities it interviewed reported using their 340B savings in ways that were consistent with the program’s intent.

A June 2011 study by Safety Net Hospitals for Pharmaceutical Access found that 340B hospitals use program savings to help vulnerable patients by reducing the price of drugs for low-income patients, increasing patient access to pharmacy services, expanding the selection of drugs available to patients, enhancing pharmacy and other healthcare services, and serving more patients, especially those who are indigent or otherwise vulnerable.

The vast majority of these hospitals say that if they did not have access to 340B discounts, their uninsured and underinsured patients would see higher drug costs and reduced services. Some facilities would have to close their doors altogether.

The 340B program benefits taxpayers, too. The Congressional Budget Office has consistently projected that proposed expansions of 340B would generate savings for the federal government. That’s why the program continues to enjoy strong bipartisan support despite an aggressive lobbying campaign by very powerful interests.
Like any other government program, it goes without saying that 340B can be improved. But does it need invasive surgery, as some of its critics recommend? Absolutely not.

Stupak served in the House of Representatives from 1993 to 2011. He now practices law and is a lobbyist for Venable LLP. Wood served as pharmacy manager for University of Utah Hospital and is now a pharmacy consultant as well as a board trustee of Aspirus Ontonagon Hospital in Ontonagon, Mich.